The recent Pfizer-Biocon insulin
products deal has created waves in the Indian biopharma industry. This
deal opens a floodgate of opportunities for Indian biosimilar
companies, in providing contract clinical/manufacturing services, and
collaborating on other novel products

October 18, 2010 saw a major milestone in the global
biopharmaceutical industry, with Biocon, Asia's premier biotechnology
company, and Pfizer, world's leading biopharmaceutical company, signing
a strategic global agreement, under which Pfizer will pay 890
crore
($200
million)
for
exclusive
rights to globally commercialize
several of Biocon's insulin products - Recombinant Human Insulin,
Glargine, Aspart and Lispro. Biocon is also eligible to receive from
Pfizer, an additional payment of about 600
crore
($150
million),
towards
further
development of the drugs, and to
meet regulatory milestones. Biocon would also receive payment linked to
Pfizer's sales of the insulin products.

This deal enables Pfizer to get exclusive rights for commercialization
of these products globally - with certain exceptions, including
co-exclusive rights for all products with Biocon in Germany, India and
Malaysia. Pfizer will also have co-exclusive rights with existing
Biocon licensees, with respect to some products, primarily in a number
of developing markets. Biocon will remain responsible for clinical
development, manufacture and supply of these biosimilar insulin
products, as well as for regulatory activities - to secure approval for
these products in various geographies. Biocon's recombinant human
insulin formulations are approved in 27 countries in developing
markets, and commercialized in 23; while Glargine has been launched in
India.

Commenting on this alliance, Kiran Mazumdar-Shaw, chairman &
managing director of Biocon, says, "This, indeed, is a significant
inflection point in our globalization path. Pfizer and Biocon together
bring a winning combination of marketing, manufacturing and research
excellence – that can build a formidable global footprint in diabetes
care. Pfizer brings brand strength; besides a vast, unrivaled global
marketing network - that will enable Biocon to realize its objective of
seeing its insulin portfolio have a worldwide presence."

Industry views
Reacting to the developments, Dr Rajesh Jain, joint managing director,
Panacea Biotec, says, “It is indeed a positive step for the Indian
biotechnology industry, as this deal signifies the acknowledgement of
Indian biotech companies' research capabilities by multinational
companies. In my opinion, it is just the beginning, that will spur the
exponential growth of biotechnology space, both in India and globally.
Such deals will certainly have a salutary effect on the industry, in
general, and companies focusing on biosimilars, in particular. This
deal will enable those companies to attract international investment
and talent, more easily than before.”

Commenting on the prospects of the deal, KV Balasubramaniam, managing
director, Indian Immunologicals, says, “The deal is definitely a good
booster shot for the biopharmaceutical industry in India, leading to
more investment in this sector. Since this is a recognition of the
growing competencies of the Indian biopharmaceutical industry, more
specifically, its research and quality manufacturing capabilities. The
companies that have a sound product pipeline and with recognized
research capabilities, will benefit from similar deals. MNCs will
cherry-pick products from established players in India, and look at
sourcing cheaper from India.”

“The domestic biosimilars market is not expected to see any significant
changes due to this deal, given the dynamics of the insulin market in
India. On the other side, globally, this deal can be very impactful on
the biosimilar industry. So far, only generic pharmaceutical companies
have participated in biosimilar markets, and have had limited sales and
marketing expertise in selling branded products in the developed
market. This was one of the factors responsible for low market
penetration of biosimilar, so far. Pfizer's large sales force can help
market these branded biosimilars more effectively, and can potentially
garner meaningful market share,” says KV Subramaniam, president &
CEO, Reliance Life Sciences.

Outcome of the deal
Sujay Shetty, associate director, Pharma Life Sciences Advisory
(Corporate Finance), PricewaterhouseCoopers, India says, “The
Pfizer-Biocon deal will have a huge positive impact on biopharma
companies. At the same time, the deal has created confidence among
multinational companies who are keen on working with Indian biotech
companies that are building on manufacturing capabilities for future
needs. Such deals will help Indian biotechnology companies to monetize
assets they are building upon. This deal will open doors for other
biosimilar companies as well.”

KV Anantharaman, principal analyst (healthcare, research and analysis),
Datamonitor, India, says, “The Pfizer-Biocon deal crystallizes Pfizer's
entry into global biosimilar market, and fortifies the efforts of the
Established Products Business Unit, that was created to counter the
patent cliff that Pfizer was heading for. Pfizer's Established Products
Business Unit, which is currently worth about 44,546
crore
($10
billion),
aims
to
stabilize its current base business, and
transform it into a growing business segment, in order to capitalize on
the about 2,000,000
crore
($500
billion)
opportunity,
presented
by the global established
products market by 2011.”

"The Pfizer-Biocon deal is a path-breaker in Indian history. It is a
deal where an Indian company has developed a marketable product for
which only clinical trials need to be done for the highly-regulated
market. Also, the deal is amongst two biggest companies with no
presence in the insulin segment, till date. It shows the prowess of
Indian R&D, showcasing to the world, the capabilities of Indian
companies, to develop not only generic medicines but also innovative
technology-based products that can be taken to the world," says Dipta
Chaudhury, program manager (Pharma & Biotech Practice), South Asia
& Middle East, Frost & Sullivan.

This deal marks Pfizer's entry into the diabetes segment, which is one
of the major growth drivers of the pharmaceutical industry worldwide -
given that over 285 million people are afflicted by the disease
globally. The recombinant human insulin market represents an
estimated 62,000
crore
($14
billion)
opportunity;
and
will allow Pfizer to compete with
well established competitors like Novo Nordisk, Eli Lilly and
Sanofi-aventis.

Q How will the
global commercialization agreement with Pfizer augment growth for the
diabetes product portfolio of Biocon?
Pfizer brings huge brand strength to Biocon's insulin portfolio, as
well as enormous credibility to our biologics capabilities. We believe
that this quality endorsement from Pfizer will help us garner greater
market share in global markets, where our products currently have a
presence. We also expect our market share in India to increase, by
eating into MNC brands.

Q What
is your expectation in terms of
acquiring insulin market share both in India and globally?
We expect to see increased market share in India and other markets
where our insulin products have a presence.

Q Why is the
much-talked about oral insulin
of Biocon excluded from this agreement?
This is a novel program which is distinctly different from biosimilar
insulins. Oral Insulin will be licensed as a separate asset.

Q Since Biocon has a
strong presence in
India, what prompted you to agree for a co-exclusive rights deal with
Pfizer?
Despite being in the market since 2005, we have attained only 10-15
percent market share. We believe that Pfizer can help dislodge
entrenched MNCs, to gain market share.

Q How will this deal
impact Indian biosimilar
market and the global insulin market?
Quality that is benchmarked with the highest international standards,
will become increasingly vital to carve leadership in the biosimilar
insulins segment.
Biosimilar insulins in the regulated markets of US and Europe will be
solely dependent on physician prescriptions, and not substitutable like
generic drugs. Pfizer will have the medical infrastructure to effect
this, and make a commercial success of this portfolio.